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Thursday, May 06, 2010

Business Day Thursday: Best Perceived Value - Discounts or Gift Cards?

Good Morning Everybody,

Another beautiful day in the neighborhood today - I sure hope this weather lasts through the weekend. It is just so cool to work on the blog while sitting on the back deck enjoying a cup a morning joe.

And speaking of iPads, everyone is looking for the best and coolest apps. I don't want to steal Terry White's thunder over on his Tech Blog [link] - but I'm planning on doing a post of my favorite apps that I've found so far, and I've found some very cool ones. Look for it next Wednesday. It should be fun.

Hey gang, I got thinking about this week's blog topic last week and am really fired up about it so let's get right to it.

Best Perceived Value - Discounts or Gift Cards?

Look anywhere - all of us are constantly bombarded with offers for this and discounts on that. We see the offers in the mail, on TV, in magazines and newspapers, all over the internet - these offers are everywhere, right? How do we respond to these offers, what kind of "call to action" works best? Which offers give us the best reason to buy a certain product?

Here are my thoughts on the topic. Okay, listen closely now. I want you to consider two discount scenarios. There is a product you would love to purchase - it's offered by two reputable companies and it costs $250. Here is my question. One company runs an ad and offers a 20% discount on that item - great a $50 savings. Another company sends you a $50 gift card in the mail good for any purchase at their store totaling $250 or more. Which off has the greatest perceived value.

Almost universally, the customer will answer that the $50 gift card is the best, most effective way to make the offer. Why? Because a gift card "feels" like CASH IN YOUR HANDS! Well, it really is, isn't it? How did you answer the question? It seems automatic to prefer the gift card, doesn't it? It's still the same $50 savings in both offers but the gift card is a great "call to action" because, as I said - it "feels' like cash.

I think something else is happening here too. If you offer a discount, allowance, etc. at say 20%, the customer has to make a mental calculation as to how much the 20% off is. The gift card takes the math out of the decision getting the customer quickly one step closer to a buying decision without having to do the math.

Having to do the easy mental math is what makes the discount something that could easily postpone the buying decision, even until the offer may be forgotten about in just a few days. The gift card though, is like cash burning a hole in your pocket where you want to spend it - heck, it's $50!

Do you see what I'm saying here? As small business owners, it is the easiest and most effective way for us to build sales. Frank Wilson, who is the "King of Gift Cards", inspired my other gift card post right here. He has been raving about their effectiveness since I first met him years ago. Be sure to read the Comments Section too for lots more gift card ideas. Frank has them with him all the time and will spontaneously give them to any type of prospective client.

Here's the deal. You can get your own gift cards custom made lots of places online. 4ColorPrint.com [link] offers 2 sides, 4-color gift cards for $119 for 250 cards - like $.50/card - cheap. My1Stop.com [link] is a bit pricier at $190 for 250 cards.

If this idea turns you on, then I really recommend my buddies over at Marathon Press [link] who offer gift cards in quantities as small as 50 cards. For $132, you can get 250 cards - on par with the best prices on the net. But, here is what makes Marathon different when it comes to gift cards. They also offer a special gift card fold-over note card and imprinted envelope to really "class up" your gift card presentation to your client. Yep, it's a bit pricier, but good impressions sometimes are.

If it was me, I would be carrying gift cards with me to every wedding, on every family portrait shoot, I would be generously passing them out wherever I might meet a prospective client. Think about it, your new gift cards may be your new business card;~)

I love the idea, let me know what you think in the Comments section below.

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Hey gang, that's it for me today - back to my edit for Kelby Training. I'm still about a day away, but I should have them over to them by the weekend. I'll follow up with them next week and give you an update on when the next lesson will go "live."

Have a good one today, and I'll see you tomorrow for another episode of "Keeping the Faith" - At A Muslim Wedding.

3 comments:

One to consider. I've been using the 4x6 custom made business card idea since I read it here. I get so many people say: "Wow, that's your business card?" I get to go a step further by letting them know they get the same quality print from my print company. Investing in potential sales sometimes costs a little more, but usually the return is worth the effort.

Interesting, David. Before you gave the "answer" I stopped to think what *my* answer was; my answer was the opposite. I'd have the cash discount. Why? Well unless I intended to make a future purchase at the same establishment the gift card is of no value to me. Say I was buying a TV at an electrical store: I would not be looking for further electrical items (most likely) for some time and when I did I would shop around. So a discount card would not draw me in. The only time I would be interested in the gift card mechanism at all would be if I were a regular shopper there - for example at the supermarket that I get my groceries at. I would contend that photographic purchases are more like TVs than groceries (infrequent luxury vs staple).

I had magnetic gift cards in the amount of $50 printed up and have been giving them to vendors (jewlers, florists, hair salons, etc) for around 7 months now - I've given out hundreds of them;not one single response. Hope others fare better.Karen

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David Ziser, an internationally renowned portrait and wedding photographer, has shared his knowledge with ten’s-of-thousands of photographers, in 5 languages, and in 14 countries worldwide.
Studio Photograph magazine has extolled..."Award winning photographer, David Ziser, is showing the world how to take wedding pictures." His "Digital WakeUp Call tour was acclaimed as one of the "best ever" seminars on digital photography.